Dubai Regulator VARA Fines Fuze for AML Failures and Violating Its License

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Dubai’s Virtual Assets Regulatory Authority (VARA) has levied an undisclosed financial penalty against licensed virtual asset service provider Morpheus Software Technology FZE, also known as Fuze. This follows a regulatory investigation that revealed shortcomings in its AML program, related governance, compliance framework, and internal systems and controls.

Fuze was also found to have “intentionally conducted unlicensed [virtual asset] activity, in breach of the conditions set out in the [Virtual Asset Service Provider] Licence, and failed to disclose material facts to VARA.”

In response to the failures, VARA has imposed an undisclosed fine on Fuze and appointed a “Skilled Person” to oversee the execution of Fuze’s remediation plan. Fuze is to remain subject to ongoing VARA supervisory oversight and must fulfil the imposed remedial actions.

Fuze acknowledged VARA’s findings concerning its UAE entity, noting that the issues relate to a set of historical transactions and that there has been no impact on its business operations. The company says it immediately halted the flagged activity, launched an internal investigation, and has since implemented a remediation program, fully cooperating with VARA oversight while strengthening its compliance systems. 

The case comes amid a booming UAE virtual asset landscape, with a 42% annual growth rate, as regulators seek to harmonize their approach to crypto regulation in the country.